Share Capital Types : Stock Market : NISM NCFM Course in Hyderabad

Meaning of Share Capital : NISM NCFM Course in Hyderabad

Stock Market : NISM NCFM Training Courses in Hyderabad Ameerpet

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Share capital is the sum of money received by a company by selling its shares to the investors. When a company issues fresh share to the investors and raises fund, it directly increases the value of share capital.

The amount of total share capital cannot be more than the amount of authorized share capital of a company. Increase in market price of shares does not affect the value of share capital because share capital is calculated based on the par value of shares and not on the basis of market price.

Share capital is shown on the balance sheet of a company.

Types of Share Capital

Types of Share capital can be categorised in authorized share capital, issued share capital, subscribed share capital, called up share capital and paid up share capital.

Authorized share capital:

Authorized share capital refers to the total capital that a company is authorized to accept from investors by issuing shares. In simple terms, a company cannot raise capital more than its authorized capital.

It represents the capital with which a company is registered that’s why it is also known as ‘registered capital’.

Issued Share Capital:

Issued Share Capital represents that part of total authorized share capital which has been issued by a company for subscription by investors. Usually, companies do not issue all of their shares for control purpose. Thus, the part which is issued represents the issued share capital.

Subscribed share capital:

It refers to that part of issued share capital, which has been subscribed by investors. It means when a company issues shares to raise capital, it may or may not receive subscriptions for all of its shares. The part of issued share capital for which subscription has been received is known as subscribed share capital. So subscribed share capital can be equal to subscribed share capital but not more than that.

Called up share capital:

A company collects the full amount of share price in more than one lot. The part of subscribed share capital which has been asked for payment represents called up share capital.

Paid up share capital:

It represents that part of called up share capital which has been paid by investors.

Paid up share capital = Called up share capital – Call in arrears.

Example:

Suppose ABC Ltd. is registered with a capital of Rs 1 crore divided into shares of Rs 10 each. It issues 8 lakh shares to raise a fund of Rs 80 lakh but investors subscribe for 6 lakh shares. The company calls for Rs 4 per share out of Rs 10 (Nominal value of shares) and it receives payment for only 5 lakh and 50 thousands shares.

Now,

Authorized share capital (10 lakh shares of Rs.10 each) = 1 crore

Issued share capital (8 lakh shares of Rs.10 each) = 80 lakh

Subscribedshare capital (6 lakh shares of Rs.10 each) = 60 lakh

Called up share capital (6 lakh × Rs.4) = 24 lakh

Paid up share capital (5 lakh and 50 thousand × Rs.4) = 22 lakh

Call in arrears (50 thousand × Rs.4) = 2 lakh

Source: monetarysection.com

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A S Chakravarthy NCFM Academy Hyderabad is reputed for its training delivery standards in the NISM & NCFM Classes in Hyderabad and most popular for Financial Markets, Capital Market, Derivative Market, Currency Market, Commodity Market, Fundamental Analysis and Technical Analysis Coaching in Hyderabad for Share Markets. a s chakravarthy NCFM Academy Hyderabad has imparted training to hundreds of batches and thousands of students since its inception and is considered to be monopoly institute in providing Mutual Fund Distribution Module NISM-Series 5-A, and NCFM Course Training in Hyderabad and The Oldest Institute Training on Stock Market Technical Analysis in Hyderabad Telangana for Trading & Investment : Skills, knowledge and career oriented practical training guidance to students, professionals and corporate organizations in Hyderabad. Especially his Technical Analysis Institute in Hyderabad for Professional Trading.